HONG KONG -- Chinese premium electric vehicle maker Nio plans to launch a mass-market brand to take on Tesla, and will roll out three new models next year as it tries to widen its customer base.
The planned models include its first premium sedan, the ET 7, and a cheaper variant to add to Nio's current lineup of three sport utility vehicles as it leans on falling battery costs and rising production volumes to keep prices down, William Li, Nio's chairman and chief executive, said after the company unveiled a smaller quarterly loss.
"Basically, our thinking is that we would like to launch a product that can have competitive pricing compared with Tesla's products but can provide much better products and services," he said in a call to analysts. "The core team of the new brand has been assembled, marking the first step of the strategic initiative of NIO," Li said without giving details.
Chinese carmakers are stepping up their efforts to dethrone Tesla in the mainland by launching new models just as the U.S. carmaker battles a string of scandals in China. Deliveries of new energy vehicles, which includes EVs and hybrids, soared 164% in July from a year earlier, according to data from the China Association of Automobile Manufacturers, while those of Tesla fell 26%.
Nio and its local rivals, including Xpeng, have planned a slew of new models as electric vehicles grab a larger share of auto sales in China. In the first seven months of the year, EVs accounted for 10% of the total. Last year, EV's made up 6.3% of passenger car sales, according to research specialist Canalys.
"As EV adoption begins to reach a tipping point worldwide, we believe it is imperative to speed up the launch of new products," Nio's Li said.
Nio's existing models are all priced higher than Tesla's Model 3 Sedan -- the bestselling EV last year in China -- and the locally built Model Y SUV crossover.
Li ruled out launching budget models to compete with the mini EV vehicles produced by a joint venture between SAIC Motor, General Motors and Liuzhou Wuling Motors. In March, the $4,300 model overtook Tesla's Model 3 to become the world's bestselling EV.
"We believe that they have already done a very good job in this specific segment; we would like to do something different," he said.
Nio's deliveries surged 112% to a record 21,896 cars in the three months ended June 30. That helped the company narrow its net loss to 659.3 million yuan ($101.77 million) in the second quarter from 1.21 billion yuan a year ago and 4.87 billion yuan in the previous quarter.
The company expects deliveries in the current quarter to rise to 23,000 to 25,000 cars, an 88.4% to 104.8% increase from a year earlier, despite production challenges.
The latest outbreak of COVID-19 has a forced a component supplier in the eastern city of Nanjing to suspend production and has slowed chip output at a plant in Malaysia. The recent flooding in Germany also destroyed production facilities at one of Nio's parts suppliers, Li said.
"So, overall ... the delivery volume in the third quarter will be mainly restrained by the overall capacity of the supply chain," he added.
Nio plans to enter more European markets, including Germany, he said without giving a time frame. The company in May said it had picked Norway for its maiden overseas foray and aimed to begin deliveries in September.
The New York-listed company, which is backed by the municipal government of Hefei, the capital of China's Anhui Province, is said to be preparing a secondary listing in Hong Kong to hedge against the likelihood of forced delisting in the U.S., amid deteriorating relations between Beijing and Washington. Its shares have surged more than sixfold since their market debut in May 2018.
Nio's compatriot, Li Auto, which is also listed in the U.S., made its Hong Kong stock market debut on Thursday after raising $1.5 billion in a dual primary listing. Shares in Li Auto fell as much as 2.1% in morning trade. An executive told local media that the company is also considering a mainland listing.
Xpeng, which is also listed in New York, already trades in Hong Kong. It raised $1.8 billion in the city last month.